Index trend and stocks in action October 03, 2019

Over the last three sessions, things have certainly changed on D-street as a sweet dish which was served by the finance minister in the form of corporate tax cut to revive the sagging economy has already started to turn sour. On Tuesday, the bears logged a hat-trick of losses. It all started on Friday when the bear entered with a foot in the door and thereafter, the winds of change have begun to blow as in subsequent days the bears clearly dominated the highly volatile and violent session. The volatility index, India VIX, on Tuesday jumped over 5 per cent to close at 16.75 mark; on intra-day basis VIX shot up to the 18 mark, reflecting jitteriness among traders.

The financials and realty stocks fell like ninepins as a result three out of five top losers on Nifty 50 were financial stocks – Yes Bank, SBI and IndusInd Bank. In our earlier note we clearly mentioned that once the zone of 11,380-11,410 is breached, it’s just a matter of time when Nifty will test its 200-DMA and on this we hit a bull’s eye as Nifty after breaching the mentioned support level went on to touch its 200-DMA and then rebounded from the 200-DMA. Nifty added yet another distribution day. Back-to-back recording of distribution in the last two sessions and the price slipping below the 100-DMA does not go down well with the bulls.

Furthermore, the candlestick pattern formed on the daily chart is not an encouraging one. Now going ahead, a break and close below the 200-DMA which is currently placed at 11,255 is likely to open up two levels of the downside in the form of 11,192 which is 50 per cent retracement level of the recent up move began on September 20, followed by 11,075 which is 61.8 per cent retracement level. Resistance is now seen in the area of 11,543 and 11,600. The Ace of Spades, Bank Nifty, is a very important index for the overall market. It has had the potential to single-handedly take the market up or down. In recent times, we have witnessed it under-performing the market and it has also breached its important long-term moving average i.e. 200-DMA.

In the coming sessions, the onus will be on the banking and financial stocks to turn the tide in favour of bulls and the big trigger will be the outcome of the RBI policy. Bottomline: Considering the current technical evidence, the future picture is not so favourable for the bulls and volatility will continue to haunt the market participants as a major event is about to unfold in the next couple of days. Hence, the best way to trade is hedge and control risk, if possible.

Cadila Healthcare: Zydus Cadila announced that Saroglitazar Magnesium has achieved the primary end-points in the Evidences IV trial in patients with NAFLD and NASH.

Indiabulls Housing Finance: The company has stated that since April 2019 when the company announced its merger with Lakshmi Vilas Bank, it is being subjected to various attacks from vested interests. The latest being a PIL filed in the Delhi High Court by Citizens Whistle Blower Forum. Also, the company has put forward all the factual positions in the public domain on all the five groups mentioned in the PIL.

Infosys: SAP and Infosys will collaborate to accelerate enterprise digital transformation for clients.

Coal India: Coal India’s monthly production stood at 30.77 million tons in September, down by 23.5 per cent YoY and shipments dropped 20 per cent YoY to 35.18 million tons.

InterGlobe Aviation: Indian low-cost airline co-founder Rahul Bhatia and his IGE Group have submitted a request for arbitration in the London Court of International Arbitration against partner Rakesh Gangwa on issues of compliance with the shareholders agreement and articles of association in the company.

JSW Steel: CARE has reaffirmed long-term rating to ‘CARE AA’ and short-term rating to CARE A1+ for bank facilities, non-convertible debenture programme and commercial paper programme of the company. The outlook on the long-term rating has been revised to ‘negative’ from ‘stable’.

RBL Bank: The company has presented clarifications regarding recent rumours and market speculation stating that the bank remains well-capitalised with its capital adequacy and liquidity coverage ratios well above the regulatory threshold.

Prestige Estates Projects: The company will invest alongside DB Group in building India’s one of the largest hotel and convention centre at DIAL Aero City in Delhi. The total investment is to the tune of Rs 2,000 crore, which is the balance required to complete the project. Prestige will bring in Rs 355 crore for 50% equity stake in the joint venture.

HAL: Workmen unions at various locations of the company have given notice of an indefinite strike commencing from October 14, 2019 in support of their demand for fair and early settlement of Wage Revision 2017.